Real estate is fast becoming a hot topic but so many people don’t really know what some of the real estate terms mean. Yes, most people know there are buyers and sellers, property listings, and real estate agents, but there is a lot more to know and understand.
Here are 27 Real Estate Terms that are good to know when dealing with real estate.
Common Real Estate Terminology & Definitions
Appraisal – An estimate or opinion of the property’s value and marketability accessed by a licensed appraiser.
As-is – a property that is marketed “as-is” is usually a property that the seller is unwilling to perform most if not all repairs. It could also mean that it is priced lower than the market pricing in a particular area.
DOM – “Days on market” – the number of days from which a property is listed on the MLS until the seller has signed an offer to purchase contract for the property with a buyer.
Comparable – a recently sold property that has similar characteristics to a particular property of interest used for estimating a probable sales price or value of the property of interest.
CMA – Comparative Market analysis – an estimate of the probable sales price of a particular property prepared by a licensed real estate broker. Fill out our free Comparative Market Analysis form to have a customized report on the value of your home based on local comparables.
Inspection – an assessment of a home by a professional inspector who is hired by a buyer to visit a home and give a report on its condition and any possible repairs that are needed. This is done during the Due Diligence period so that the buyer can decide if they want to buy the home as-is or ask for the seller to complete or pay for needed repairs.
MLS – Multiple Listing Service – a database of properties for sale where real estate agent/broker members can access and add information about properties for sale in the area. The information can be accessed by other agents/broker members to see what properties are on the market or properties that have sold and their sales price. Take a look at what’s currently listed on the MLS for the Boone area to find available homes and properties.
Closing or Settlement – when the sale of the home or property is final, and the buyer is considered the new homeowner. In order for the sale to be considered final, all parties must sign all the required documents, all monies must be distributed or authorized by a lender, and the deed recorded with the Register of Deeds/ Clerk of Court’s office)
Deed – a legal document that states who owns the land, where it is located, the boundaries, and any restrictions of use on the property. The deed is the document that transfers the title or the legal ownership of a property from the grantor (seller) to a grantee (buyer).
Easement – A right to use the land owned by another person for a specific purpose such as a right of way across another person’s property to gain access to your property, the right to use water from a well on another person’s property, the right to use another’s land for a septic drain field, etc.
Title insurance – an insurance policy that protects buyers and mortgage lenders from defects in title or errors in past ownership records.
Title Search – An examination of public records for the history of a home which includes previous sales and purchases, taxes, and liens on the property.
Real Estate Agent Titles
Buyer Agent – a licensed real estate professional whose fiduciary responsibility is to the buyer. They represent the buyer and their interests by helping them to locate a property and negotiate on their behalf, the best possible purchase price.
Listing Agent or Seller’s Agent – is a licensed real estate professional whose fiduciary responsibility is to the seller. They will market a seller’s property and represent the seller and their best interest in negotiating the best-selling conditions and securing the best price.
REALTOR® – an actively licensed real estate professional who is a member of the National Association of REALTORS®. (Not all real estate agents are REALTORS®). REALTORS® set high standards in practicing real estate by upholding the Code of Ethics of the association when serving the public, clients, and each other.
Real Estate Agent/Broker – a licensed real estate professional who represents and acts on behalf of another person or client in a real estate transaction.
Dual Agent – an agent who represents both parties in a transaction (buyer and seller). Both parties must be informed and consent in writing to dual agency.
Escrow Agent – a third party who holds money in an escrow account or other things of value such as a contract, deed, bond, or other written instrument until the purchase agreement between the buyer and seller is satisfied.
If you’re on the hunt for a real estate professional, here are 4 things to look for in an agent to guide your selection.
Real Estate Fees & Costs
Closing Costs –fees that are to be paid at the time of closing a real estate transaction. Such fees may be charged by a lender, the title company, insurance companies, prorated property tax authorities, HOA, real estate agents, attorneys, or other companies associated with the closing settlement.
Due Diligence Fee – a nonrefundable amount of money that the buyer offers to the seller for allowing inspections and tests to be performed on the property during the Due Diligence period. If the property goes to closing the DD money will be credited to the buyer on the closing statement. If the buyer terminates the contract for any reason, the buyer will NOT be refunded the due diligence fee.
Due Diligence period (DD) – a time period stated in the purchase agreement that provides the buyer time to fully examine the property and hire professionals to inspect and perform tests, etc. on the property so that the buyer fully understands what they are buying. Based on the findings of the inspections/tests performed the buyer may have the opportunity to renegotiate the terms of the purchase contract or even terminate within the specified time period.
Earnest Money Deposit (EMD) – Money that a buyer puts down as a “Good Faith Deposit” once a seller accepts the buyer’s offer. The amount of Earnest Money can vary between 1% and 5% of the sales price. Earnest Money is deposited into an escrow account usually held by an escrow agent.
For a further breakdown of earnest money deposits and due diligence periods, read our blog on Due Diligence & Earnest Money Processes in North Carolina.
HOA – Homeowner’s Association – a private association that establishes and manages a planned community or condominium. Homeowners pay monthly or yearly dues and are required to abide by the rules and regulations set by the association. Every HOA operates under it’s own unique set of rules. You can learn more about HOAs here.
CC&R – Covenants, conditions, and restrictions – rules and regulations set by Homeowner’s Association that states guidelines and requirements for what a homeowner is allowed to do with the property. This may include monthly or yearly dues, building restrictions, special assessments, landscaping approval, etc.
Pre-approval letter – a letter given by a lender stating the exact loan amount that the homebuyer is pre-approved for as well as the total sales price that they are approved for. This is a process that begins with an application filled out by the homebuyer that allows the lender to look at their finances which includes their debt-to-income ratio, creditworthiness, and their ability to repay the loan.
Pre-qualification – is only a quick estimate of the loan amount that the home buyer is expected to be approved for. This is not a verified amount, only an estimate based on what the home buyer tells the lender.
Proof of funds – documents that show proof that the home buyer has the cash readily available to pay for the property.
Documents that qualify as proof of funds are:
- Original or online bank statement with bank letterhead
- Copy of a money market account balance with bank letterhead
- Certified financial statements signed by an accountant showing income or cash flow
- An open equity line of credit (ELOC)
For further explanations of mortgage loan information, check out this blog on High Country North Carolina Mortgage Loans.